• Text size
  • Send this article to a friend
  • Print this article

Bottom line battered

OFFICIAL ESTIMATES of Scottish farming's income in 2012 have revealed a painful £111 million slump.

The downturn, equivalent to a 15% year-on-year reduction in the industry's key 'Total Income from Farming' statistic, is being blamed upon a horrible hat-trick of economic blows – increased costs, decreased yields and an unfavourable currency exchange rate.

"Given the many factors that together made life more difficult for the industry in 2012, it might not be surprising but it is still disappointing that the income figures have fallen back from last year's highest ever position," said Scottish rural affairs CabSec Richard Lochhead.

"These figures illustrate the impact on incomes that have resulted from poor weather, rocketing input costs and a decline from last year's often record livestock prices. The change in the exchange rate also reduced the value of CAP payments.

"Although some factors can't be influenced, I am keen to work with the industry to build greater stability into Scottish agriculture through securing new markets, tackling input costs and securing a successful outcome from the current farming negotiations in Europe," he said.

Mr Lochhead also sought to make a political point based on the disappointing income statistics, saying that this wild fluctuation in the industry's returns – through no fault of its own – demonstrated the continued need for direct farm support.

"These figures illustrate how out of touch the UK Government has become, given that at a time when Scottish agriculture continues to face some big challenges, as borne out by these statistics, the DEFRA Secretary of State is campaigning for the removal of support for food production and Scottish farming."

Speaking from the National Farmers Union Scotland, policy director Jonnie Hall said that the income statistics confirmed what an 'abject year' 2012 had been for the majority of Scottish farmers.

"A combination of weather-affected output, surging costs and lower exchange rates have stripped more than £110 million out of Scotland's total income from farming when compared with a year earlier – a fall in TIFF of 15% to £635 million is a financial hole that will take a significant period of time to recover from," warned Mr Hall.

"The value of our outputs in 2012 may only have fallen back by 1% or £20 million to £2.78 billion," he noted. "However, the drop in 2012 output was outstripped by a 2% increase in costs that followed hard on the heels of a 12% increase in costs the year before.

"In total, costs of production to Scottish farming are up by almost £300 million to £2.71 billion in 24 months. That level of increase makes accurate budgeting at a farm business level very difficult to achieve."

Mr Hall conceded too that falling Euro rates had inflicted significant damage on the value of Scotland's farm support payment pot, which was down £45 million on the year to £557 million.

"Ongoing difficulties in the pig and lamb sectors, poor autumn and spring sowing conditions and continued concerns over milk prices have all meant that the last few months of 2012 and the start of 2013 have struggled to raise spirits at farm level," he said

"Our Wet Weather Survey, carried out in late 2012, highlighted a number of measures that would make a difference at farm business level," said Mr Hall. "As we negotiate our way through CAP Reform and a new rural development plan for Scotland, we need to make sure that measures come into place that make our members more resilient to fluctuating weather and volatile markets."

Commenting & Moderation

We moderate all comments on The Scottish Farmer on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.